Professional Documents
Culture Documents
The project is a part of submission for the course IHRM for PGP-HR 2009-11 Term VI
Acknowledgement
We would like to take this opportunity to extend our gratitude to Prof. Pawan Budhwar
whose knowledge and experience has served as a continuous source of encouragement and
motivation. Without his invaluable guidance, this project would not have been possible. We
are grateful to the PGHR chairperson Prof. Jyotsana Bhatnagar for giving us the opportunity
to pursue this course under an esteemed faculty.
Last but not the least we would like to thank our esteemed institute, Management
Development Institute, Gurgaon, for providing the necessary facilities, without which this
project would have remained an unfulfilled dream.
Table of Contents
Company chosen
The company that we have chosen for our analysis is Tata Motors. The company has subsidiaries in
U.K., and plans to progress in Mexico and Kenya.
Methodology
The methodology followed by us was-
Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs.
92,519 crores (USD 20 billion) in 2009-10.
It is also amongst the top three in passenger vehicles with winning products in the compact,
midsize car and utility vehicle segments
Along with that Tata Motors is World’s fourth largest truck manufacturer, and the world's
second largest bus manufacturer.
It is guided by the vision to be "best in the manner in which we operate, best in the products
we deliver, and best in our value system and ethics.“
Tata Motors has it operations in the UK, South Korea, Thailand and Spain. It also has a
strategic alliance with Fiat.
Mexico
United Kingdom
Kenya
Dimension Score Score Score Score U.K.
Kenya India Mexico
Power Distance 64 77 81 35
Index
Individualism 27 48 30 89
Masculinity 41 56 69 66
Uncertainty 52 40 82 35
Avoidance Index
Long Term 25 61 25
Orientation
In the UK, Tata Motors has set up the Tata Motors’ European Technical Centre in Warwick, engaged
in the business of design engineering and product development for the automotive industry.
In January 2008, Tata Motors unveiled its People’s Car, the Tata Nano, to be launched later in the
year in India. A development that signifies a first for the global automobile industry, the Nano brings
the comfort and safety of a car within the reach of thousands of families. The high fuel efficiency also
ensures that the car has low carbon dioxide emissions, thereby providing the twin benefits of an
affordable transportation solution with a low carbon footprint. Tata Motors’ portfolio comprises the
Tata, Jaguar and Land Rover brands.
The loan will support the £25 million investment from Tata Motors to develop and
manufacture electric vehicles in the UK.
Loan will strengthen electric vehicle manufacturing expertise, securing and creating high value
engineering jobs in the West Midlands. "The government is determined to help the car industry to
exploit fully the opportunities offered by green manufacturing. Today we are backing Tata as Tata
backs Britain,” Business Secretary Lord Mandelson.
The current immigration categories for highly skilled workers, investors and entrepreneurs -
Investors :Explains the requirements for applying under Tier 1 (Investor) of the
points-based system
Post-study workers: This section explains how you can apply under Tier 1 (Post-study
work) of the points-based system.
Working in U.K.
There are three principal bases on which you may apply to bring non EEA nationals to work in the
UK:-
Work permit: The work permit scheme enables UK based employers to recruit and bring employees
from outside the EEA to work in the UK. However, strict and detailed rules apply to work permit
applications and in most cases the employee will need to have a UK degree level qualification.
The Department of Education and Employment issues all work permits through its Overseas Labour
Service (OLS). It accepts applications only from employers based in the UK in respect of a specific
job. The application must be made before the proposed employee arrives in the UK, typically taking
two to four weeks to process. Generally speaking, there are three types of work permit:
A full work permit - must show that there is no other person within the EEA who can
perform the job to the required standard
An intra-group work permit -the employee must have worked for at least 6 months at a
relatively senior level in your organisation
Board level work permit – The individual must have responsibility for the day-to-day
running of the company in the UK, will have a number of years' experience at that level
and will command a salary of at least £50,000
Work permits can be granted for up to five years. After four years, the employee may apply for
permanent residency in the UK (which, if granted, means that he or she will no longer require a work
permit to continue working in the UK).
Sole representative: If you have no existing branch or subsidiary or representative in the UK, 'sole
representative' may enter the UK to establish a branch or a subsidiary without a work permit.
However, in all cases, entry clearance must first be obtained from the British Embassy or Consulate.
The applicant must provide:-
http://www.hamiltonpratt.com/pages/international/staffing
Finding Workers in UK
Prospective employees in U.K. have rights before they become employees. They have a right to be
protected against discrimination on the grounds of gender, race, disability or marital status when
advertising or offering employment. Also trade union membership and activities may not be used as a
reason for refusing to employ a person.
Worker's Rights in UK – Workers have a lot of rights in U.K. Businesses in the UK typically issue
an employment contract to each of their employees. In addition to their contractual rights, employees
enjoy a range of statutory rights; including:-
Right to a written statement setting out certain basic terms and conditions (insofar as not
covered in any employment contract)
Right not be required to work for more than 48 hours a week on average (although
workers may agree to opt out of this protection);
Right not to be unfairly dismissed (the maximum compensatory award for unfair
dismissal is £55,000)
Right not to be discriminated against on the grounds of sex, race or disability (the award
of compensation for discrimination is not subject to any limit
Participative culture
Some of the relevant factors to be considered for employees from outside the UK to work in
the UK are-
If the intention is that the employee will return to his or her 'home country‘
Whether the position filled by the employee has changed from the one which he or
she previously had while working in his or her 'home country'.
Based on the information regarding the rules for employing workers and staffing regulations in U.K.,
we critically analyze the 3 staffing approaches for Tata Motors in U.K.
1. Ethnocentric Approach- Headquarters from the home country makes key decisions,
employees from the home country hold important jobs, and the subsidiaries follow the
home country resource management practice.
Positives
Negatives
Manufacturing sector is experience the worst of the skills shortage problem. Half of the companies
interviewed expected the skills gap to widen. 39% of the public sector expects the situation to
deteriorate .Most commonly cited skills shortage - engineering (20%), skilled manual workers (10%),
financial capitalists (10%), managerial positions (9%), sales, IT and technicians (7%), and clerical
staff (5%)
Reference: http://www.numbersusa.com/content/news/august-19-2009/uk-cut-skilled-labor-influx-
protect-jobs.html
3. Geocentric approach - The company applies the global integrated business strategy
manages and staffs employees on a global basis. Like a company following geocentric
approach has for many years attempted to recruit and develop a group of international
managers from diverse countries. These people constitute a mobile base of managers who
are used in a variety of facilities as the need arises. Manager selection is based on
competency rather than nationality.
Positives:
a. TCNs are usually career international business managers with a wealth of experience.
c. TCNs may be better informed about their host environment than PCNs
Negatives:
1. People from other nations may not be able to adjust in UK due to different culture.
- UK Police statistics show that black people are seven times more likely to be
stopped and searched than white.
- Asian people are today twice as likely to be stopped and searched as white people.
Recommendations for staffing approach for Tata Motors in U.K.- Tata Motors U.K. at the lower
level should follow the Polycentric Approach as U.K. has a great talent pool in terms of skilled
labor and the regulations for working there also favor that. While for the Middle and higher
management it should follow the geocentric approach as done by Electrolux and Mahindra.
Examples
-Fosters: Foster’s Brewing International has business partnerships with leading local brewers in
the UK, Europe and the USA, and in Asia owns breweries in China, Vietnam, India, Fiji and
Samoa. Foster’s is currently ranked the number two selling brand in the UK; number one in
London, number seven across Europe, sixth largest imported beer brand in the USA; number two
beer brand in the Middle East and the most recognisable beer across Asia. Fosters adopts a
geocentric approach in which it fills a position with the best person suited for the job regardless
of nationality. This also allows Foster’s to adapt to their recruitment and selection practices to
different cultures.
-Electrolux is a vacuum cleaner company. It follows a geocentric approach. For many years it
has attempted to recruit and develop a group of international managers from diverse countries.
These people constitute a mobile base of managers who are used in a variety of facilities as the
need arises.
Mexico
Recruitment Considerations at Mexico
Hiring: In Mexico, jobs can be advertised specifically for men or women, with an age
range identified, and marital status specified as well. It is never advisable to try to hire
anyone without having talked to a lawyer. The rigidities in the law make firing very
difficult.
Minimum Wage Structure: Minimum wage in Mexico is about $100 USD a month plus
benefits, although few people in the formal economy make so little. The federal
government, depending on economic zone and trade, sets minimum wage. If one wants to
reduce the turnover rate one will most likely have to pay employees at least three times
the minimum wage.
Language: Knowing Spanish is essential for doing business. At least one bilingual
person working is important so staffing need to be done accordingly.
Benefits
Profit sharing. Workers are entitled to a small percentage of your profits. (10% of
the total)
Working Hours
Business Hours
All banks are open from 9:00am until 5:00pm, Monday through Friday. Some
banks have extended hours, including Saturdays, at some branches.
Supermarkets in Mexico City are open seven days a week, from 9:00am to
12:00am, although there are many that are open 24 hours a day.
In Mexico City, street front stores are usually open from 10:00am to 8:00pm.
In other cities hours may be shorter.
The standard work schedule is Monday to Friday, eight hours a day and a
half-day on Saturdays.
According to Mexican law, the work week cannot be more than 48 hours
long.
Some workers get paid weekly; others may get paid bi-weekly (quincena).
Legally, lunch hour must be paid for workers whose work shift includes lunch
time (3:00-4:00 pm).
High power distance cultures prefer a strong internal recruitment culture with no
participatory management from subordinates in the staffing process. In such cultures,
supervisors favour employees who are loyal, submissive, and trust-worthy.
Job applicants in Mexico feel a tremendous pressure on being youthful and attractive
as these characteristics seem the most sought after in job requirements.
Bio-data solicit recent photographs putting a lot of pressure on characteristics that are
not job-related
The collectivist cultures place a lot of emphasis on soft skills and therefore adopt
staffing practices that can predict such behaviour.
Personal references, succession planning (for employees already working in the
organisation) and psychometric tests seem to be the predominant methods of staffing
in Mexico.
The process of online recruitment does not allow for identifying of soft skills and
elaborate information exchange – therefore it is not a predominant staffing method
To ensure new subsidiary complies with overall corporate objectives and policies
Has the required level of competence
Assignments as control
Employment of Mexico-nationals eliminates language barriers, avoids adaptation of
Indians, reduces the need for cultural awareness training programs
Employment of Mexico-nationals allows a multinational company to take a lower profile
in sensitive political situations
Employment of Mexico-nationals is less expensive
Employment of Mexico-nationals gives continuity to the management of foreign
subsidiaries (lower turnover of key managers)
- The cost of talent in Mexico is lower than the western countries but higher than in
India
- The amount of technically qualified talent available in Mexico is lower than that of
India
- Training Indians towards the cultural sensitivity and language of Mexico is more in-
expensive than the other way round
- The core competence of the TATA group can be most efficiently replicated in this
case
Negatives:
Limits the promotion opportunities of Mexico, leading to reduced productivity and
increased turnover among the Mexico
Longer time for Indians to adapt to Mexico, leading to errors and poor decisions being
made
Difficult to bridge the gap between Mexico subsidiary managers and Indian managers at
headquarters ( language barriers, conflicting national loyalties, cultural differences)
Mexico managers have limited opportunities to gain experience outside their own country
Indian managers have limited opportunities to gain international experience
Resource allocation and strategic decision making will be constrained when headquarter
is filled only by Indians who have limited exposure to international assignment
2. Geocentric Approach
Positives:
Ability of the firm to develop an international executive team with equal contribution
from Mexico
Overcomes the federation drawback of the polycentric approach
Support cooperation and resource sharing across units in Mexico and other places
Negatives:
3. Regiocentric Approach
Positives:
- Applicable import tariffs for Indian cars without the investment requisite would be 20
percent
- A gap that would diminish any competitive advantage gained from producing in
India.
- Analysts see the move of Tata as a direction to land on the US market, by taking
advantage of North American Free Trade Agreement.
Negatives:
Produce federalism at a Mexico-level rather than a country basis and constrain the firm
from taking a global stance
Staff’s career advancement still limited to Mexico regional headquarters, not to India
Cost of talent in Mexico -considerably higher than the cost of talent in India
Amount of technically qualified talent available in Mexico - lower than that of India
Training Indians towards the cultural sensitivity and language of Mexico is more in-expensive
than the other way round
Speed at which operations can be started is higher in the case of ethnocentric approach
Core competence of the TATA group can be most efficiently replicated in this case
Kenya
Kenya is World’s 47th largest country with 37 million population having 0.5 Million Indians having
42 ethnic tribes having 50% population below poverty line. And the main Language there is Swahili.
Its education system is similar to India: 8-4-4, where they follow grade system and primary education
is free. It has significant portion of foreign influx from non-resident Kenyans having manufacturing
accounting for only 14% of its GDP. Automotive Industry in Kenya is mainly in retailing and
distributing the vehicles.
It has been one of the most stable political conditions in Africa. A market-based economy, it is
liberalized external trade system. It offers competitive investment incentives and has a business
friendly tax system. Some of the measures that KMI (Kenya Motor Industry Association) has been
advocating include:
Kenya is well placed to offer technical, administrative and general back office services.
Culture
Its culture is similar to that of India. Women education is not encouraged much specially at graduation
level and in streams like engineering. Its corruption Index is very high.
2. Polycentric
Lower costs
Problem: Unavailability of talent for higher posts. Kenya has been susceptible to high
brain drain
3. Geocentric
It will help align the employees to TATA culture which is not difficult considering
similarities between two cultures
For HCNs, work-ex, achievement orientation, long term growth, ability to adjust in lesser
developed countries, cross-cultural sensitivity could be important factors
For both HCNs and TCNs, their family situation like aspirations of their spouse or children (if
any) would be very important factors owing to a different life style, and lesser opportunities.
Hence, it would be advisable to send the HCNs or TCNs recruited to visit the place for some
time before they take up the assignment with full responsibility
Examples
Mahindra & Mahindra has appointed a local Kenyan Company to distribute its
product Scorpio.
Suzuki has followed a similar strategy of staffing
References
7. http://www.geert-hofstede.com/hofstede_east_africa.shtml
8. http://www.ibe.unesco.org/International/ICE47/English/Natreps/reports/kenya.pdf
9. http://www.ict.go.ke/oldsite/pdfs/do-it-in-Kenya.pdf
10. http://www.epzakenya.com/UserFiles/File/Kenya%20Business%20Environment
%20Report.June05%20final.pdf
11. http://ismailimail.wordpress.com/2010/05/21/daily-nation%C2%A0-opinion%C2%A0-
kenya%E2%80%99s-education-culture-needs-real-transformation/
12. http://en.wikipedia.org/wiki/Kenya
13. http://expogr.com/kenyaauto/media.php
14. http://www.pwc.com/ke/en/industries/automotive.jhtml